Managed knowledge a valuable asset<\/p>\n
By Bambang Wicaksono Witoyo<\/p>\n
JAKARTA (JP): Unlike other kinds of company assets, knowledge
\nincreases in value differently.<\/p>\n
In comparison to capital assets, knowledge assets have two
\ndistinct characteristics.<\/p>\n
First, \"harvesting\" knowledge does not increase its value,
\ninstead its value increases when used and \"shared\" with the right
\npeople. Knowledge is a capital asset that grows in value as it is
\nused. When knowledge is used over and over again, it tends to
\nbecomes polished and updated and consequently more valuable.<\/p>\n
A second distinct characteristic of knowledge is that its
\nvalue is not only indexed to an individuals knowledge base, but
\nto the entire organization's knowledge.<\/p>\n
This characteristic is double-faceted.<\/p>\n
First it is marked by collectiveness. That is, if the
\nknowledge involves explanation of a certain process, then every
\nindividual participating in the process would have his\/her own
\nvalued opinion on how to improve the existing situation. At the
\nsame time, input to increase the value of existing knowledge need
\nnot come only from those involved in the process; individuals and
\ngroups outside the inner sanctum may possess fresh perspectives.<\/p>\n
Knowledge has always been recognized as a key factor for
\nbusiness success. However, only in the last decade, as the
\ncompetitive business environment intensified, has it become
\ncrucial for business success. Only then did business players
\nunderstand that competing for rival business systems, and using
\ncommon industry management practices have its limitations.<\/p>\n
To excel, companies cannot just implement common management
\npractices, they must tailor or even create new techniques for
\ntheir purposes. The best source for these tailoring and creating
\nopportunities comes from the collective knowledge within a
\ncompany.<\/p>\n
This point deserves reflection. Standard analysis presupposes
\nthat fresh perspectives to help reengineer processes originate
\noutside the company.<\/p>\n
However, effective internal knowledge management can result in
\nsolutions that are not only innovative, but more importantly
\nappropriate for the organization.<\/p>\n
Greater appreciation for the intrinsic value of knowledge has
\nprompted initiatives at both micro and macro levels, accelerating
\nperformance growth to levels that previously could only be
\nimagined.<\/p>\n
Companies are not the only organizations that have created
\ngrowth by leveraging the value of knowledge. Community
\norganizations from a wide spectrum have experienced economic
\ngrowth from using a knowledge-based system of expansion.<\/p>\n
A knowledge-based approach provides significant contributions
\nat both micro and macro economic levels.<\/p>\n
How important is managing knowledge at the micro level?<\/p>\n
In economics, the \"micro level\" concerns companies and
\nindividual players.<\/p>\n
Knowledge at this level is obviously important. We know that
\nan organization receives input from outside as well as inside its
\nboundaries; processing and creating output is information.<\/p>\n
Here, information plays two roles. First, to ensure that
\ninternal processes continue to work as expected and second, to
\nensure that the organization displays appropriate growth as it
\nadapts to changes in its internal and external environments.<\/p>\n
Excelling in these two roles will enable an organization to
\nsurvive. Taking the roles on board will enable an organization to
\nmeet its short-term goals, and consequently succeed in achieving
\nits long-term vision. It's that simple. Like other successes,
\ngrowth arises from a solid foundation.<\/p>\n
What are the specific components of these roles, which are
\ncentral to the longevity and health of an organization?<\/p>\n
As a key ingredient to an organization's longevity, knowledge
\nneeds to be managed to ensure that it continuously evolves to be
\nbecome more valuable. For example, the assembly procedure for
\nassembling a Swatch watch is knowledge that may continuously
\nevolve into ones that will reduce costs and time in the
\nproduction process.<\/p>\n
However, so that the process or information optimally evolves
\ninto something more valuable, it should be used and \"shared\" with
\nall the right people in the company.<\/p>\n
These efforts have led companies to initiate programs to
\nregulate information known as Knowledge Management (KM).<\/p>\n
KM is defined as the systematic approach to obtain the
\ncollective knowledge of an organization. It includes gathering,
\nevaluating, consolidating, organizing, distributing and applying
\nthe organization's knowledge.<\/p>\n
Moreover, the value of KM applies to both manufacturing
\ncompanies and service providers.<\/p>\n
One KM initiative is the development of the internal knowledge
\ndatabase. A firm with a global perspective, such as Andersen
\nConsulting, provides an example of this approach.<\/p>\n
Not only does the company share the expertise of its employees
\nacross countries, but knowledge in the form of methodologies and
\nexperiences are stored in databases accessible from any one of
\nits offices around the world. Stored information is used,
\nchallenged and updated, continually increasing its value.<\/p>\n
But even if a company has solid KM database systems, it should
\nrealize the importance of employee retention as a key element to
\nkeep knowledge evolving inside the company.<\/p>\n
Chief executive officer of Hanigan Consulting in New York,
\nMaury Hanigan, said: \"Companies don't always see the relationship
\nbetween recruitment and retention ... You keep hiring, and you're
\nstill not in a stronger position than last quarter\".<\/p>\n
The option of recruiting experienced employees from outside is
\navailable. However, companies run the risk of having to pay
\nhigher compensation, accept lower company loyalty, and deal with
\nthe new personnel's adjustment period. All these factors impede a
\ncompany's learning curve and impact on daily operations.<\/p>\n
To put it simply, KM initiatives ensure the longevity of the
\norganization's operations through continual improvement of
\navailable knowledge. This process encourages growth with minimal
\ninterruption.<\/p>\n
At the macro level, how has managed knowledge affected the
\ngrowth of major economies?<\/p>\n
Here, the word \"major\" is used to distinguish between
\ndeveloped economies and developing and underdeveloped ones. It
\nbecomes evident that when we compare activities among economies,
\nwe find that a key characteristic that separates the two main
\neconomic groups is the establishment of infrastructure that
\nallows information sharing. One of the information vehicles that
\noptimize such infrastructure use is the Internet.<\/p>\n
The Internet allows knowledge and information to be used and
\nshared by people at the macro level -- spanning from individual
\ninterests to country concerns. With its almost limitless
\npotential, the Internet is a one-stop source of information.<\/p>\n
To understand the Internet's substantial contributions, we
\nneed to look at the impact it has had on two economic players:
\nsellers (organizations) and consumers. The relationship between
\nthese two groups is critical.<\/p>\n
As a information-sharing vehicle, the Internet has greatly
\nimproved the relationship between vendors and consumers. Sellers
\nhave more information on the needs of their target customers, and
\nconsumers have more information to help them make better buying
\ndecisions.<\/p>\n
On the company's part, the Internet provides information about
\nconsumers' needs, progress of the related products, and
\ninformation about the industry and its stakeholders, all at low
\ncost.<\/p>\n
Access to such information provides businesses with ideas to
\nimprove their products and services, and enhances internal
\nprocesses which enable them to be more competitive. Such measures
\nlead to higher expectation standards throughout the industry.<\/p>\n
This, as a result, creates a synergistic effect, where the
\nwhole is greater than the sum of its parts. If the improvement
\neffect is imitated by other industries, the result is continual
\nimprovement in the whole economy.<\/p>\n
As a two-way relationship, consumers also gain. From the
\ninformation they obtain from the Internet, consumers are able to
\nmake better decisions regarding the product or service they buy,
\npushing suppliers to be more competitive in their businesses.<\/p>\n
Additionally, consumers can provide feedback, which will be
\navailable for sellers to use on-line and real-time, further
\nincreasing expectation standards throughout the industry. With
\nthe support of the market economy, only the best players will be
\ngiven the opportunity to operate.<\/p>\n
The value of managed knowledge is clear. But at what cost? And
\nhow do we measure the return? Because the kinds of knowledge
\nmanagement programs required by organizations vary, the costs
\nalso vary.<\/p>\n
The benefits obtained from such programs usually outweigh any
\noutlay, even though they are generally difficult to gauge.<\/p>\n
One reason for these measurement difficulties is because the
\nimpact of KM programs is massive and diverse, adding value
\nthroughout the different activities in the organization and\/or
\nthe economy.<\/p>\n
The main challenge for business leaders is to identify value-
\nadding KM programs that may be initiated in their companies.<\/p>\n
As leadership guru Warren Bennis said: \"The problem facing
\nalmost all leaders in the future will be how to develop their
\norganizations' social architecture so that it actually generates
\nintellectual capital\".<\/p>\n
The writer is a change management analyst at Andersen
\nConsulting, a global consulting company in management and
\ntechnology.<\/p>",
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